A transferable letter of credit is a type of financial guarantee, known as a letter of credit, that additionally allows the first beneficiary to transfer some or all of the credit to another party, which creates a secondary beneficiary. ... A transferable letter of credit is an alternative option to advance payments.

What does Transferable LC mean?

A Transferable Letter of Credit (LC) is a documentary credit under which the Beneficiary (first Beneficiary) may request the bank specifically authorised in the credit to transfer the credit, available in whole or part, to one or more secondary Beneficiary(ies).

What is the risk of transferable LC?

Owing to the characteristics of their own, the parties of transferable L/C have to face risk in general as the parties in common L/C, but also to deal with special risks of transferable L/C, such as the credit risk of transferring bank, the risk of broker document changing faced by the second beneficiaries, the risk of ...